SEC Loosens Custodial Rules for Digital Assets Amid Regulatory Challenges
The SEC's recent decision to expand acceptable custodians for digital assets has effectively lowered compliance standards—a MOVE that paradoxically enhances investor protection in the short term. By reducing barriers to entry, regulators aim to prevent market participants from fleeing to entirely unregulated platforms, where risks are exponentially higher.
This regulatory adjustment underscores a fundamental tension in crypto oversight: balancing consumer safeguards with the industry's decentralized ethos. The asymmetry between bad actors' ability to exploit victims and users' limited recourse remains the core problem financial regulations seek to address. Unlike traditional sectors like food service, digital asset fraud operates without geographical or temporal constraints, amplifying potential harm.
